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Note 3 - Loans Receivable

12 Months Ended

Dec. 31, 2025

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3 - Loans Receivable

The loan portfolio is comprised of three portfolio segments that reflect the Company’s lending strategy and risk management practices. These segments include Real Estate Loans, Consumer Loans, and Commercial Business Loans. Each portfolio segment is further disaggregated into classes of loans with similar attributes and risk characteristics. Management uses these segment and class groupings to evaluate portfolio performance and determine the allowance for credit losses.

Loan amounts are presented at amortized cost which is comprised of the loan balance net of unearned loan fees in excess of unamortized costs and unamortized purchase premiums of $21.5 million and $19.1 million as of December 31, 2025 and 2024, respectively. The amortized cost reflected in total loans receivable does not include accrued interest receivable. Accrued interest receivable on loans was $5.0 million and $6.0 million as of December 31, 2025 and 2024, respectively, and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the calculation of the allowance for credit losses on loans.

The amortized cost of loans receivable, net of derivative basis adjustment and ACLL, consisted of the following at the dates indicated:

(dollars in thousands)	December 31, 2025			December 31, 2024
Real Estate:
One-to-four family	$	376,731		$	395,315
Multi-family		288,529			332,596
Commercial real estate		402,683			390,379
Construction and land		61,268			78,110
Total real estate loans		1,129,211			1,196,400
Consumer:
Home equity		85,088			79,054
Auto and other consumer		283,502			268,876
Total consumer loans		368,590			347,930
Commercial business loans		130,311			151,493
Total loans receivable		1,628,112			1,695,823
Less:
Derivative basis adjustment		(903	)		188
Allowance for credit losses on loans		16,987			20,449
Total loans receivable, net	$	1,612,028		$	1,675,186

Loans receivable by the earliest of next repricing date or maturity, at the dates indicated:

(dollars in thousands)	December 31, 2025		December 31, 2024
Adjustable-rate loans
Due within one year	$	412,034	$	391,843
After one but within five years		312,494		323,885
After five but within ten years		28,341		50,004
After ten years		41		—
Total adjustable-rate loans		752,910		765,732
Fixed-rate loans
Due within one year	$	72,026	$	77,600
After one but within five years		133,589		148,388
After five but within ten years		157,870		180,519
After ten years		511,717		523,584
Total fixed-rate loans		875,202		930,091
Total loans receivable	$	1,628,112	$	1,695,823

The adjustable-rate loans have interest rate adjustment limitations and are generally indexed to multiple indices. Future market factors may affect the correlation of adjustable loan interest rates with the rates First Fed pays on the short-term deposits that have been primarily used to fund such loans.

The following table presents the amortized cost of nonaccrual loans by loan class at the dates indicated:

	December 31, 2025						December 31, 2024
(dollars in thousands)	Nonaccrual Loans with ACLL		Nonaccrual Loans with No ACLL		Total Nonaccrual Loans		Nonaccrual Loans with ACLL		Nonaccrual Loans with No ACLL		Total Nonaccrual Loans
One-to-four family	$	91	$	2,181	$	2,272	$	364	$	1,113	$	1,477
Commercial real estate		5		9,740		9,745		4		5,594		5,598
Construction and land		7		5,139		5,146		10		19,534		19,544
Home equity		53		—		53		55		—		55
Auto and other consumer		25		1,061		1,086		—		700		700
Commercial business loans		303		3,990		4,293		2,537		604		3,141
Total nonaccrual loans	$	484	$	22,111	$	22,595	$	2,970	$	27,545	$	30,515

Interest income recognized on a cash basis on nonaccrual loans for the years ended December 31, 2025 and 2024, was $132,000 and $201,000, respectively.

Past due loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. There were no loans past due 90 days or more and still accruing interest at December 31, 2025 and 2024.

The following table presents the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of December 31, 2025:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total loans receivable
Real Estate:
One-to-four family	$	867	$	1,288	$	523	$	2,678	$	374,053	$	376,731
Multi-family		—		—		—		—		288,529		288,529
Commercial real estate		3,435		—		—		3,435		399,248		402,683
Construction and land		1		—		5,146		5,147		56,121		61,268
Total real estate loans		4,303		1,288		5,669		11,260		1,117,951		1,129,211
Consumer:
Home equity		—		—		53		53		85,035		85,088
Auto and other consumer		3,565		528		1,062		5,155		278,347		283,502
Total consumer loans		3,565		528		1,115		5,208		363,382		368,590
Commercial business loans		19		2,686		270		2,975		127,336		130,311
Total loans receivable	$	7,887	$	4,502	$	7,054	$	19,443	$	1,608,669	$	1,628,112

The following table presents the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of December 31, 2024:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total loans receivable
Real Estate:
One-to-four family	$	333	$	321	$	839	$	1,493	$	393,822	$	395,315
Multi-family		876		—		—		876		331,720		332,596
Commercial real estate		—		—		5,594		5,594		384,785		390,379
Construction and land		17		8,150		11,384		19,551		58,559		78,110
Total real estate loans		1,226		8,471		17,817		27,514		1,168,886		1,196,400
Consumer:
Home equity		53		—		—		53		79,001		79,054
Auto and other consumer		2,905		437		700		4,042		264,834		268,876
Total consumer loans		2,958		437		700		4,095		343,835		347,930
Commercial business loans		676		—		604		1,280		150,213		151,493
Total loans receivable	$	4,860	$	8,908	$	19,121	$	32,889	$	1,662,934	$	1,695,823

Credit quality indicator. Federal regulations provide for the classification of lower quality loans and other assets, such as debt and equity securities, as substandard, doubtful, or loss; risk ratings 6, 7, and 8 in our 8-point risk rating system, respectively. An asset is considered substandard if it is inadequately protected by the current net worth and pay capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that First Fed will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a credit loss reserve is not warranted.

When First Fed classifies problem assets as either substandard or doubtful, it may choose to individually evaluate the expected credit loss or may determine that the characteristics are not significantly different from those in pooled loan analysis. The Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. When an insured institution classifies problem assets as a loss, it is required to charge off such assets in the period in which they are deemed uncollectible. Assets that do not currently expose First Fed to sufficient risk to warrant classification as substandard or doubtful but possess identified weaknesses are designated as either watch or special mention assets; risk ratings 4 and 5 in our risk rating system, respectively. Loans not otherwise classified are considered pass graded loans and are rated 1-3 in our risk rating system.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of December 31, 2025, as well as gross charge-off activity for the year ended December 31, 2025. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

	Term Loans by Year of Origination ⁽¹⁾												Revolving		Total
(dollars in thousands)	2025		2024		2023		2022		2021		Prior		Loans		Loans
One-to-four family
Pass (Grades 1-3)	$	7,571	$	4,066	$	8,065	$	128,413	$	109,134	$	113,570	$	—	$	370,819
Watch (Grade 4)		—		387		—		292		—		2,355		—		3,034
Special Mention (Grade 5)		—		—		—		529		—		43		—		572
Substandard (Grade 6)		—		—		—		259		—		2,047		—		2,306
Total one-to-four family		7,571		4,453		8,065		129,493		109,134		118,015		—		376,731
Gross charge-offs		—		—		—		—		—		—		—		—
Multi-family
Pass (Grades 1-3)		8,081		17,738		17,820		80,638		51,091		37,775		—		213,143
Watch (Grade 4)		5,825		9,732		—		22,204		24,889		4,902		—		67,552
Special Mention (Grade 5)		4,531		—		3,303		—		—		—		—		7,834
Total multi-family		18,437		27,470		21,123		102,842		75,980		42,677		—		288,529
Gross charge-offs		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass (Grades 1-3)		61,864		21,177		44,009		50,828		70,765		89,639		—		338,282
Watch (Grade 4)		3,671		7,572		—		12,118		6,204		3,120		—		32,685
Special Mention (Grade 5)		—		—		—		4,251		3,419		1,771		—		9,441
Substandard (Grade 6)		9,740		—		—		5		12,530		—		—		22,275
Total commercial real estate		75,275		28,749		44,009		67,202		92,918		94,530		—		402,683
Gross charge-offs		985		—		—		—		5,586		—		—		6,571
Construction and Land
Pass (Grades 1-3)		26,259		24,510		351		1,571		1,477		422		—		54,590
Watch (Grade 4)		—		1,532		—		—		—		—		—		1,532
Substandard (Grade 6)		—		—		5,139		—		—		7		—		5,146
Total construction and land		26,259		26,042		5,490		1,571		1,477		429		—		61,268
Gross charge-offs		—		—		1,884		—		—		—		—		1,884
Home Equity
Pass (Grades 1-3)		6,552		4,290		4,257		4,841		3,641		6,138		54,422		84,141
Watch (Grade 4)		—		117		182		132		—		23		280		734
Special Mention (Grade 5)		—		—		—		—		—		9		101		110
Substandard (Grade 6)		—		—		—		—		—		50		53		103
Total home equity		6,552		4,407		4,439		4,973		3,641		6,220		54,856		85,088
Gross charge-offs		—		—		—		—		—		—		—		—
Auto and Other Consumer
Pass (Grades 1-3)		65,818		54,755		30,871		41,590		50,744		32,830		822		277,430
Watch (Grade 4)		—		1,023		1,167		1,522		386		146		1		4,245
Special Mention (Grade 5)		79		126		393		43		24		76		—		741
Substandard (Grade 6)		—		85		640		262		—		99		—		1,086
Total auto and other consumer		65,897		55,989		33,071		43,417		51,154		33,151		823		283,502
Gross charge-offs		—		22		228		313		13		32		137		745
Commercial business
Pass (Grades 1-3)		11,921		21,923		12,145		5,452		2,889		19,955		41,274		115,559
Watch (Grade 4)		3,447		1,638		565		251		13		250		1,280		7,444
Special Mention (Grade 5)		—		1,457		99		910		211		112		130		2,919
Substandard (Grade 6)		334		96		169		3,514		276		—		—		4,389
Total commercial business		15,702		25,114		12,978		10,127		3,389		20,317		42,684		130,311
Gross charge-offs		692		434		—		2,478		2,015		686		—		6,305
Total loans
Pass (Grades 1-3)		188,066		148,459		117,518		313,333		289,741		300,329		96,518		1,453,964
Watch (Grade 4)		12,943		22,001		1,914		36,519		31,492		10,796		1,561		117,226
Special Mention (Grade 5)		4,610		1,583		3,795		5,733		3,654		2,011		231		21,617
Substandard (Grade 6)		10,074		181		5,948		4,040		12,806		2,203		53		35,305
Total loans receivable	$	215,693	$	172,224	$	129,175	$	359,625	$	337,693	$	315,339	$	98,363	$	1,628,112
Total gross charge-offs	$	1,677	$	456	$	2,112	$	2,791	$	7,614	$	718	$	137	$	15,505

(1) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of December 31, 2024, as well as gross charge-off activity for the year ended December 31, 2024. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

	Term Loans by Year of Origination ⁽¹⁾												Revolving		Total
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Loans		Loans
One-to-four family
Pass (Grades 1-3)	$	1,596	$	10,315	$	130,021	$	116,245	$	64,869	$	65,927	$	—	$	388,973
Watch (Grade 4)		—		—		297		1,305		1,006		2,141		—		4,749
Special Mention (Grade 5)		—		—		—		—		—		78		—		78
Substandard (Grade 6)		—		—		273		—		840		402		—		1,515
Total one-to-four family		1,596		10,315		130,591		117,550		66,715		68,548		—		395,315
Gross charge-offs		—		—		—		—		—		—		—		—
Multi-family
Pass (Grades 1-3)		19,871		31,334		105,919		74,679		49,885		11,299		—		292,987
Watch (Grade 4)		8,755		—		1,764		23,051		1,278		976		—		35,824
Special Mention (Grade 5)		—		3,785		—		—		—		—		—		3,785
Total multi-family		28,626		35,119		107,683		97,730		51,163		12,275		—		332,596
Gross charge-offs		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass (Grades 1-3)		35,011		51,514		72,064		97,421		74,182		28,762		—		358,954
Watch (Grade 4)		552		3,779		10,371		—		—		767		—		15,469
Special Mention (Grade 5)		—		—		—		—		1,255		2,702		—		3,957
Substandard (Grade 6)		—		—		4		11,995		—		—		—		11,999
Total commercial real estate		35,563		55,293		82,439		109,416		75,437		32,231		—		390,379
Gross charge-offs		—		—		—		—		—		—		—		—
Construction and Land
Pass (Grades 1-3)		20,870		15,874		13,638		1,357		504		327		—		52,570
Watch (Grade 4)		213		5,531		—		222		—		30		—		5,996
Substandard (Grade 6)		8,150		11,384		—		—		—		10		—		19,544
Total construction and land		29,233		32,789		13,638		1,579		504		367		—		78,110
Gross charge-offs		—		4,389		—		—		—		—		—		4,389
Home Equity
Pass (Grades 1-3)		5,779		5,860		5,868		4,117		2,571		4,620		49,531		78,346
Watch (Grade 4)		122		—		65		—		35		61		326		609
Substandard (Grade 6)		—		—		—		—		55		11		33		99
Total home equity		5,901		5,860		5,933		4,117		2,661		4,692		49,890		79,054
Gross charge-offs		—		—		—		—		—		—		—		—
Auto and Other Consumer
Pass (Grades 1-3)		55,699		46,719		65,193		36,235		12,268		47,728		518		264,360
Watch (Grade 4)		848		786		980		52		217		496		—		3,379
Special Mention (Grade 5)		228		14		—		157		—		38		—		437
Substandard (Grade 6)		240		243		31		—		133		53		—		700
Total auto and other consumer		57,015		47,762		66,204		36,444		12,618		48,315		518		268,876
Gross charge-offs		—		505		1,536		92		17		237		107		2,494
Commercial business
Pass (Grades 1-3)		29,228		19,478		8,744		3,633		1,495		40,670		35,209		138,457
Watch (Grade 4)		—		136		1,064		314		—		—		3		1,517
Special Mention (Grade 5)		—		—		1,279		1,552		—		2		—		2,833
Substandard (Grade 6)		47		252		3,752		1,818		611		—		2,206		8,686
Total commercial business		29,275		19,866		14,839		7,317		2,106		40,672		37,418		151,493
Gross charge-offs		2,105		259		2,771		2,022		139		—		—		7,296
Total loans
Pass (Grades 1-3)		168,054		181,094		401,447		333,687		205,774		199,333		85,258		1,574,647
Watch (Grade 4)		10,490		10,232		14,541		24,944		2,536		4,471		329		67,543
Special Mention (Grade 5)		228		3,799		1,279		1,709		1,255		2,820		—		11,090
Substandard (Grade 6)		8,437		11,879		4,060		13,813		1,639		476		2,239		42,543
Total loans receivable	$	187,209	$	207,004	$	421,327	$	374,153	$	211,204	$	207,100	$	87,826	$	1,695,823
Total gross charge-offs	$	2,105	$	5,153	$	4,307	$	2,114	$	156	$	237	$	107	$	14,179

(1) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

Individually Evaluated Loans. The Company evaluates loans collectively for purposes of determining the ACLL in accordance with ASC 326 by aggregating loans deemed to possess similar risk characteristics and individually evaluates loans that it believes no longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral.

Loans that are deemed by management to possess unique risk characteristics are evaluated individually for purposes of determining an appropriate lifetime ACLL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent. Collateral-dependent loans are evaluated based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company may increase or decrease the ACLL for collateral-dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. In cases where the loan is well-secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACLL is recorded. Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of December 31, 2025, $25.9 million of loans were individually evaluated with $151,000 of ACLL attributed to such loans. At December 31, 2025, two individually evaluated loans with recorded investments totaling $303,000 were evaluated using a discounted cash flow approach and the remaining loans totaling $25.6 million were evaluated based on the underlying value of the collateral. One $4.5 million commercial real estate loan was accruing interest at year end, while all other individually evaluated loans were on nonaccrual status at December 31, 2025.

As of December 31, 2024, $35.8 million of loans were individually evaluated with $2.5 million of ACLL attributed to such loans. At December 31, 2024, three individually evaluated loans with recorded investments totaling $2.5 million were evaluated using a discounted cash flow approach and the remaining loans totaling $33.2 million were evaluated based on the underlying value of the collateral. One $6.4 million commercial real estate loan was accruing interest at year end, while the remaining individually evaluated loans were all on nonaccrual status at December 31, 2024.

Collateral-Dependent Loans. Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral.

The following table summarizes individually evaluated collateral-dependent loans by class and collateral type as of December 31, 2025:

	Collateral Type
(dollars in thousands)	Single Family Residence		Condominium		Multi-family		Office Building		Gas Station		Business Assets		Total
One-to-four family	$	2,181	$	—	$	—	$	—	$	—	$	—	$	2,181
Multi-family		—		—		4,531		—		—		—		4,531
Commercial real estate		—		—		—		6,306		3,435		—		9,741
Construction and land		—		5,139		—		—		—		—		5,139
Commercial business		2,875		7		—		—		—		1,108		3,990
Total collateral-dependent loans	$	5,056	$	5,146	$	4,531	$	6,306	$	3,435	$	1,108	$	25,582

The following table summarizes individually evaluated collateral dependent loans by class and collateral type as of December 31, 2024:

	Collateral Type
(dollars in thousands)	Single Family Residence		Warehouse		Condominium		Automobile		Business Assets		Total
One-to-four family	$	1,113	$	—	$	—	$	—	$	—	$	1,113
Commercial real estate		—		11,995		—		—		—		11,995
Construction and land		8,150		—		11,384		—		—		19,534
Commercial business		—		—		—		—		604		604
Total collateral-dependent loans	$	9,263	$	11,995	$	11,384	$	—	$	604	$	33,246

Modified Loans to Troubled Borrowers. On January 1, 2023, the Company adopted ASU 2022-02, which introduced new reporting requirements for modifications of loans to borrowers experiencing financial difficulty. The Company refers to these loans as modified loans to troubled borrowers ("MLTB"). A MLTB arises from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or any combination of the foregoing. The ACLL for a MLTB is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACLL for a MLTB is determined through individual evaluation.

During the year ended December 31, 2025, there were three new MLTB. The Bank agreed to modify the rate, extend the interest-only payment period and extend the term for a commercial real estate loan which had a recorded investment of $5.5 million at the time of modification. This commercial real estate loan was in compliance with the modified terms at December 31, 2025. The Bank also agreed to defer payments on a commercial real estate loan with a recorded investment of $4.1 million at the time of modification. This commercial real estate loan was not in compliance with the modified terms at year end and was placed on nonaccrual status. A previously charged-off commercial business loan was reinstated with term and rate modifications. The commercial business loan was not in compliance with the modified terms at December 31, 2025, and was placed on nonaccrual status.

During the year ended December 31, 2024, there were two new MLTB. A commercial business loan with a recorded investment of $17,000 at the time of modification for which the Bank agreed to deferred principal payments and the borrower agreed to resume both principal and interest payments at the end of the deferral period. The commercial business loan was not in compliance with the modified terms at December 31, 2024, and the balance was charged-off. The Bank also agreed to defer payments on a commercial real estate loan with a recorded investment of $6.4 million. The commercial real estate loan was in compliance with the modified terms at December 31, 2024.